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Corporate Social Responsibility and Accountability As a Comprehensive Approach forDeveloping Reporting and Disclosure Practices in Jordan

N. I. Abu-Baker, and N. M. Abdel Karin'><

ABSTRACT

The purpose of this study was twofold: First, to assess the

current framework of corporate reporting and disclosure

practices of the large companies operating in Jordan in light of

the country's economic, social and political environment. It

highlighted possible limitations of this framework, and

suggested an alternative approach that may provide a more

relevant and adequate basis for such practices. Second, to

explore the views amongst a sample of members of the

accounting community in Jordan on: (a) the nations of corporate

social responsibility and accountability, (b) the disclosure of

corporate social responsibility information, (c) the possibility

that legal and professional requirements calling for the

disclosure of such information might be feasible, and (d) the

possibility of implementing such a sort of disclosure in Jordan.

The findings of the study suggest that a disclosure wider than

one restricting itself to a consideration of a very limited set of

stakeholders (i. e., providers of finance) within a strictly

economic domain required of large businesses in a developing

country like Jordan. Thus, an extension of the existing

disclosure and reporting practices to include corporate social

responsibility information is proposed. The findings also show

that a vast majority of respondents are willing to accept that

companies should disclose social responsibility information,

although they tend to believe that these corporations would be

unwilling to disclose this type of information without legal and

professional pressures. Finally, participants agree that members

of society other than providers of finance should have the right

to information concerning actions for which the company may

be held responsible.

1. INTRODUCTION

It has been argued that each country has its ownunique social, economic and political environmentwhich should play a vital role in moulding itsaccounting system and, hence, its corporatereporting and disclosure practices (Chambers, 1966;

* Assistant Professors of Accounting, An-najah NationalUniversity, Nablus, Palestine. Received on 18/5/1997 andAccepted for Publication on 10/12/1997.

Zeff„ 1972: Arlan and Radebaugh, 1985). Thus, itis necessary to examine the environmentalcharacteristics (socia'. economic and political) of agiven country in or. -J. - to determine whether itsaccounting system is appropriate for itsenvironment. Confirming the need for this type ofresearch in the context of developing countries,Wallace (1990) suggests that:

There is an urgent need for a deeperunderstanding of accounting systems indeveloping countries. This need can only befulfilled by intensive research of those issuespeculiar to developing countries... the scopeof accounting should not be limited tofinancial reporting and professional status ofaccountants... Little has been written on thestate of management and social accounting...As to Jordan, the basis of legitimation for current

accounting practices is derived, firstly, from therelevant laws and legislations (notably theCompanies Act No. 22 of 1997) and, secondly, fromthe standards promulgated by the IASC (IASs) thathave been adopted in 1989. It is argued that thelegal basis of legitimation of the Jordanianaccounting and reporting and disclosure practiceslacks comprehensiveness, specification orcompleteness. The IASs, on the other hand, aregenerally criticized on the ground that they fail toconsider the environmental factors of developingnations, considering that an accounting systemshould be adapted to meet the needs of eachindividual country (see, for example, Perera, 1985;Hove, 1986; Samuels, 1990). In addition to theapparent problems of implementing the IASs inJordan (Mattar, 1993), these standards might bequestioned in terms of relevance and adequacy tothe country. This contention assumes greaterimportance when one realises that the JordanianAuditors Society's adoption of the IASs may havebeen made uncritically. Another significantcriticism of the IASs set is that it has limited itself toa consideration of the relationships betweencompanies and a very limited set of stakeholders

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(providers of finance) within a strictly economicdomain (financial transactions) (Wallace, 1993).

Consideration of the above limitations andshortcomings of the current framework of corporatereporting and disclosure practices (CRSPs) of thelarge companies operating in Jordan suggests that are-examination of the roles that accounting can playin terms of relevance and sufficiency to thedeveloping country of Jordan may be warranted.

1.1. Objectives of the StudyThis study has three principal objectives. The

first objective is to examine and evaluate the currentframework of CRDPs in Jordan in the light of thecountry's economic, social and politicalenvironment in order to highlight possiblelimitations and shortcomings of such a framework.The second objective is to establish a framework asa basis for alternative practices within which widerdisclosure in terms of corporate social responsibility(CSR) information may be provided to a wider setof stakeholders. The third objective is to exploreviews and perceptions amongst members of theaccounting community in Jordan as to the notions ofsocial responsibility and accountability, thedisclosure of CSR information by the Jordanianshareholding companies (JSCs) and possiblesocioeconomic effects, the possibility that legalrequirements and accounting standards calling forthe disclosure of CSR information might be feasibleand the possibility of implementing such a sort ofdisclosure in Jordan.

In order to accomplish these objectives, thestudy:(1) Reviews, examines and evaluates the economic,

social and political environment in whichaccounting operates in Jordan;

(2) Reviews the current framework of corporatereporting and disclosure practices in Jordan;

(3) Examines CSR reporting and disclosure ingeneral and discusses the form they might takein the Jordanian context in particular; and

(4) Discusses the accountability approach as a basisfor CRDPs.

1.2. Significance of the StudyThe significance of this study lies in the

following:

First: It can be seen as attempting to fill the

existing gap in the literature concerning the status ofaccounting systems in developing countries and tocontribute to a greater understanding of theiraccounting problems by examining CRDPs inJordan.

Second: To the knowledge of the researchers, itcan be seen as unique in that it attempts to questionthe uncritical acceptance of the IASs in Jordan in1989 by addressing (conceptually and empirically)their relevance and adequacy to a developingcountry such as Jordan.

Third: It can be seen as unique in that it attemptsto address the social role that accounting disclosurein terms of CSR information in assisting theunderstanding, enhancing debate and, hence, insolving the social and economic problemsconfronting Jordan and enhancing the principles anddoctrines emphasised in the country's Constitutionand National Charter.

Fourth: It tries to establish the need for anaccountability framework as a basis for CRDPs inJordan, within which a wider disclosure in terms ofCSR information may be provided to a moreextensive set of stakeholders, and suggests such aframework.

Fifth: It can be considered as an exploratorystudy in terms of surveying the views andperceptions amongst members of the accountingcommunity in Jordan towards the notions ofcorporate social responsibility and accountability.

Sixth: It can be seen as an endeavour to draw tothe attention of the authorities, the profession andthe International Accounting Standards Comm? '';‘"

(IASC):(a) The limitations and shortcomings of the current

approach to CRDPs in Jordan in the light of thecountry's economic, social and politicalenvironment; and

(b) The importance of wider disclosure in terms ofCSR information and an accountabilityframework as a basis for CRDPs in Jordan,within which this sort of disclosure is likely tobe provided to a wider set of audience.Seventh: It can be useful as a subject matter for

comparative accounting.

Finally: It may raise some issues of interest toother researchers who are currently or may beresearching into the field.

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1.3. Hypotheses of The StudyIn order to accomplish the study objectives, the

following null hypotheses are developed and tested:Ho 1 The various groups (i.e. financial managers,

public accountants, academics and officials)possess the same perceptual profile on thenotion of social responsibilities of the JSCs.

Ho2 The various groups possess the sameperceptual profile on the groups who shouldhave a right to information about the JSCs.

Ho3 The various groups possess the sameperceptual profile on the disclosure of CSRinformation in the JSCs' annual reports.

Ho4 The average perceptions on the main reasonsfor not making CSR disclosure by the JSCsare identical for all groups involved in thesurvey (i.e. financial managers, publicaccountants, academics and officials).

The remainder of this paper encompasses sevensections. In the second section, the political, socialand economic environment of Jordan is described.Then, in the third section, the current CRDPs inJordan are reviewed. In the fourth section, theadoption, application and limitations of internationalaccounting standards are discussed, and in the fifthsection CSR reporting and the accountabilityapproach as a basis for CRDPs are examined. Theresearch data and method are explained in the sixthsection. In the seventh section, the empiricalresults are discussed. The conclusions andrecommendations are outlined in the eighth andfinal section of this paper.

2. POLITICAL, SOCIAL AND ECONOMICENVIRONMENT OF JORDAN

This section considers the environment in whichthe current CRDPs of the JSCs operate. TheJordanian political system is characterized by somebasic features (see for example Dajani and Dajani,1993) the most important of which are discussedhere. The current Constitution of the Kingdom wasestablished in January, 1952. The Constitutiondesignates the configuration of the state, theauthority and form of government, and citizens'rights and duties. The formulators of theConstitution sought to establish an independent andsovereign state capable of providing its citizens with

security and stability and, at the same time, offeringthem protection against any arbitrary act of the stateand assuring them of liberty, equality and the rightto property. According to the Constitution, theHashemite Kingdom of Jordan is a Muslim state.The teachings of Islam form a basic and formalsource for the Jordanian law. The Jordanian civillaw is based upon the Sharia (Islamic Law), whichconstitutes a principal source of many of itsprovisions. Moreover, the Jordanian society derivesits values and ideals from the teachings of Islam andthe Arabic traditions and customs.

Jordan is a parliamentary state, the NationalAssembly consisting of two distinct houses: anupper house (the Council of Notables) and a lowerhouse (the Council of Deputies). The Constitutionadopts the 'Autonomy of Powers' principle.Accordingly, the legislative power in the Kingdomis entrusted to the National Assembly and the King.The judiciary power is delegated to the Jordaniancourts. Further, the Constitution assumes the`Checks and Balances' principle which allows eachof the country's three authorities to control andbalance the others as well as putting an end to anymisuse or abuse of power. Considering theJordanian parliamentary system, one can infer thatthe Constitution seeks to establish the balancebetween the various sections of the Jordaniansociety through the role of the law.

In addition to the Constitution, there is a JordanianNational Charter (issued in 1990) which emphasizesthe duties of the institutions of the state and individualsand their organizations in supporting and maintainingthe supremacy of law, In addition, the Chartermaintains that the Kingdom abides by the principle ofsupremacy of law, and derives its legitimacy, powerand effectiveness from the free will of the people. Allpowers of the state are legitimated by the provision ofjudicial and administrative guarantees, in order toprotect human rights, dignity and the basic rights thatIslam has established.

Democracy (in its classical conception) isemphasized in the Constitution and Charter throughthe following statements: the personal liberty ismaintained; the freedom of expression; the freedomof political participation; representation; equalrights; availability of and right to information; theprotection of minorities rights; and the freedom ofworship.

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According to the Charter (see also Dajani andDajani, 1993; Milton- Edwards, 1992), 'politicalpluralism' (as a liberal democratic model) isemphasized. The pluralist vision of society (asargued by authors such as (Held, 1987; Dunleavyand O'Leary, 1991; Mitnick, 1991) takes as a pointof departure the existence of many determinants ofthe distribution of power and, hence, many powercenters. It puts particular weight on the processes bywhich individuals combine their efforts in groupsand institutions in the competition for power.Pluralism emphasizes that such interest groups arethe natural counterpart of free associations in aworld where most desired goods are scarce, andwhere a complex industrial system fragments socialinterests and creates a multiplicity of demands.

The above discussion, therefore, supports theimportance of the rule of law in running the variousaffairs in the Jordanian society. The law, accordingto the Jordanian Constitution and National Charter,provides the fundamental backing for the protectionof the rights and interests of various sections in theJordanian society. Further, it promotes theprominence of the Islamic teachings and theconceptions of democracy and pluralism in theJordanian society.

Jordan adopted an economic system based onfree enterprise and private initiative (NationalPlanning Council, 1981; The Jordanian NationalCharter, 1990). Within this framework, thegovernment has played a pioneering part throughparticipating with the private sector in implementinglarge-scale industrial projects and providingincentives and an appropriate entrepreneurialclimate for private investment. The government isinvolved in Jordan's industry and commerce as alarge shareholder in several of the big industries thataccount for the majority of the country's exports.

The structure of the Jordanian economy has beenlargely influenced by two main factors. First, thedearth of natural resources. This fact has influencedthe form of capital projects and led to a highdependency on external borrowing and assistance.Second, the political situation due mainly to theArab-Israeli conflict. For example, Jordanexperienced the demographic impact of forcedmigrations in the years 1948 and 1967 from theWest Bank and Gaza Strip. The size and sectoralcomposition of Gross Domestic Product (GDP) has

been largely determined by these conditions.Despite some changes in the structure of theJordanian economy, it is still characterized by arelatively high contribution of the services sector toboth GDP and employment. The services sectoraccounts for nearly 65 percent of GDP and has doneso for the past two decades. Further, this sector hasabsorbed 60 to 70% of the total Jordanian workforce for more than two decades. The industrialsector, accounted for around 16% of GDP duringthe last two decades and employed approximately10% of the entire Jordanian work force throughsuch a period. The sector is characterized byconcentration on a few large-scale industries. Inaddition, there are a number of intermediate andlight industries as well as small private sectorestablishments. The sector as a whole continues tosuffer from a variety of problems (see for exampleMinistry of Planning, Five-Year Plan for Economicand Social Development 1986-1990) which haveresulted in a low ratio of domestic value added tothe gross output of the sector. The percentage of theagricultural sector of GDP has fluctuated betweenaround 6 and 10% during the last to decades, andhas absorbed about 7 to 12% of the entire workforce in Jordan. Thus, it is clear that the relativesignificance of this sector in terms of GDP and workforce has been the lowest amongst all sectors.

The development approach first adopted in theearly 60's revealed a tendency towardscomprehensive development. The Ministry ofPlanning and the National Planning Councilformulated a sequence of Three-and Five-yearDevelopment Plans (e. g. 1972, 1976, 1981, 1986),many of which could not be carried through. InFebruary 1989, the Dinar had lost around 30% of itsvalue against the American Dollar as a result ofinflationary pressures, while inflation was estimatedthen at 25.8% per annum, and a growing foreigndebt estimated at SUS 8.1 billion (Arab EconomicReport, 1993). This economic crisis was followedby the Gulf war in 1991.

Despite the achieved economic growth. Jordanstill undergoes basic social and economicproblems. These problems include: povertyunemployment; high indebtedness; trade, balance ofpayments and budget deficits; uneven income/wealthdistribution; unbalanced sectorial structure of theJordanian economy had limited contribution of

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production sectors to GDP, which has led Jordan tobe highly dependent upon importation; theincommensurability of domestic investments andsavings and the high reliance on external finance forsocial and economic development; the increase ofgovernment and private expenditure over thedisposable income (the income generated internallyplus the external income such as foreign aid);unbalanced distribution of population among thevarious regions of the country; the concentration ofpeople and manpower in limited areas; unbalancedgeographical distribution of investment projects andeconomic and social services which, has led toserious problems (such as low standard of living andhealth related problems); and the increasingseriousness of environmental related problems suchas pollution, which gave rise to the establishment ofthe Jordanian Society for the Control ofEnvironmental Pollution (JSCEP) in 1988 (for moredetail about these problems see: Alhorani, 1993;Ministry of Planning, 1986; Abujaber and Vaughn1992; Ameerah, 1993; Alnabulsi, 1993; Alfanek,1993; Alokor, 1.993).

To summarize, Jordan has achieved economicgrowth during the past fourty-five years, althoughthe country, since independence, still suffers socialand economic problems which hamper thedevelopment process. These economic and socialproblems cannot only be attributed as often claimed,to scarcity of resources and the geopolitical events.Indeed, the nature of these problems shows that theymainly relate to structural and intrinsical imbalancesin the Jordanian economy and society. It is notsurprising therefore, to find many calls in Jordan(see for example Alhorani, 1993; Abujaber andVaughn, 1992) for a comprehensive nationalprogramme aiming at reforming these imbalances,rather than concerning on financial and monetaryreform policies (mainly relying on foreignborrowing) that can be seen as of little help to theseproblems for the long run. In the case of Jordan, oneof the most important features of successivedevelopment plans has been that of theencouragement of shareholding companies. It is notnecessary here to go into the reason behind suchpolicies, since they are well known (see for exampleMinistry of Planning, 1986; Alfanek, 1993), andfocus on an attempt to allocate funds, bothforeign and domestic, towards economic activities

of benefit to the community at large. What isimportant, however, is to observe that suchshareholding companies occupy a very special placein the 'social economy', and one which hassignificant implications as regards the social andeconomic development plans. In this context, thecapital appertained to JSCs constitutes more than50% of the total capital of companies registered atthe Ministry of Industry and Trade since theestablishment of the Kingdom.

3. CURRENT CORPORATE REPORTINGAND DISCLOSURE PRACTICES IN JORDAN

This section attempts to provide an overview ofthe current framework of CRDPs in Jordan. Thisreview constitutes a preliminary step towardshighlighting the possible limitations andshortcomings of this framework and, hence,suggesting the appropriate approach in the light ofthe country's economic, social and politicalenvironment examined in the previeous section.

There are two very clear elements to theconventional basis of legitimation for currentaccounting practices: the role of the law and theconcept of Generally Accepted AccountingPrinciples (GA AP). However, the basis oflegitimation for CRDPs in Jordan is derived, firstly,from the relevant laws and legislations (notably theCompanies Act No. 22 of 1997) and, secondly, fromthe. standards promulgated by the IASC that havebeen adopted in 1989.

3.1. Corporate Reporting and Disclosure Lawsand Legislations in Jordan

The accounting and auditing practices in Jordanwere without regulations until the early 1960s whenthe Auditing Profession Practice Law No. 10 wasenacted in 1961. This regulation did not have anyofficial pronouncements on general accountingprinciples, auditing standards or professional ethicsthat govern the audit profession in Jordan. It wasmainly concerned with the audit profession in theprivate sector. As a result, several legislations wereenacted during the last three decades in order toregulate the accounting and auditing profession.

In 1964, the Companies Act No. 12 thatregulated accounting and corporate reporting anddisclosure practices was passed. This Act was

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amended, but not significantly, by the CompaniesAct No. I for the year 1989 which was, in turn,amended by the Act No. 22 for the year 1997.According to these companies acts, within threemonths of the end of the company's accountingyear, the board of directors must prepare financialstatements, which include a balance sheet, a profitand loss account (with the correspondinginformation for the previous period), notes to theaccounts (all endorsed by the auditors of thecompany), a statement of accounting policy and aboard of directors report. A copy must be mailed toeach shareholder with the notice calling for theannual general meeting. Copies must be sent to theAmman Financial Market (AFM), and to theIncome Tax Department with the annual tax return.Copies of the documents sent to the shareholdersmust also be sent to the company's auditor, andmust be filed with the Controller of Companies inthe Ministry of Industry and Trade annually. Everyshareholding company must publish in a dailynewspaper its balance sheet, profit and loss accountand its directors' and auditor's reports within onemonth of its annual general meeting.

No specific legal requirements exist as to the formand contents of the financial statements. In general,presentations are similar to those in the U.K. andU.S.A. (Dahmash, 1992). There is no legalrequirement that a statement of sources andapplication of funds be released. Moreover,consolidated financial statements are not legallyrequired and are rarely called for in practice. Theboard of directors must prepare every six months areport including the Company's financial position.This report must be endorsed by the chairman of theboard, and must be sent to the Controller ofCompanies and the AFM within one month of itsendorsement by the board chairman. A shareholdingcompany must deposit a copy of its memorandum ofassociation and a list of its board of directors (whoare appointed or dismissed by the General Assemblyof the company every four years or at any timedeemed necessary) with the Controller of Companies.

It seems from the legal requirements concerningaccounting and reporting and disclosure practicesprovided by the Companies Act that there is a principleof stewardship present since the directors are obligedto inform shareholders what they have done with theirresources. Thus, from the legal basis point of view

(particularly the Companies Act), the purpose ofaccounting and reporting and disclosure practices inJordan is to enable shareholders to assess thestewardship performance of the directors and, ifnecessary, to take action against them. Accounting andreporting and disclosure practices, according to thelegal basis, can be seen as restricted to shareholders,and about purely financial aspects. The legislationlargely fails to give details and specifications of thefinancial accounting and reporting and disclosurerequired, although it identifies the standards of theIASC as those to be regarded as acceptable in Jordan.Therefore, it can be argued that the legal basis oflegitimation of the Jordanian accounting and reportingand disclosure practices cannot afford a meaningfulpractice due to the lack of comprehensiveness,specification or completeness.

3.2. The Amman Financial Market (AFM)It has been argued that capital markets contribute to

the national economy's wellbeing through increasingthe amount of funds available to finance industry andencouraging savings towards investment. This role ofcapital markets, together with the developments in theJordanian economy during the second half of theseventies, in particular the increase in the volume ofpublic and private investments, created the need toestablish an instrument capable of mobilizing theseinvestments, thus supporting the call for theestablishment of the AFM.

The AFM can be viewed as relatively new andsmall. The market was established by the AmmanFinancial Market Law No. 31 for the Year 1976.However, it did not start trading until January 1978.The 1976 Law was amended twice by the enactmentof the Amman Financial Market Law No. 1 for theYear 1990 and No. 23 for the year 1997. The mainobjectives of the market, as prescribed by these laws,include the following: (1) to promote savings throughstimulating and encouraging investment in securitiesand, to direct these savings towards the developmentof the national economy: (2) to organize and controlissues of, and dealings in securities in order to ensurethe soundness, ease and speed of these dealings andto guarantee the financial interest of the country, andthe protection of small investors; and (3) to gatherand publish the statistics and information necessaryto realize these objectives.

Most of the AFM's listed companies and

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investors are Jordanian, unlike the stock markets indeveloped countries, which include multinationalcompanies and foreign listed companies andinvestors. Within AFM, securities of the JSCs,government and companies' bonds and othersecurities and debt instruments that are introducedinto the Jordanian financial sector are traded.

One important influence of the stock market onaccounting practices is through the reporting anddisclosure required from listed companies. Whenreviewing the disclosure and listing requirementsof the AFM, one can infer that they are onlyconcerned with shareholders and investors. Inaddition, they can be seen as lax, vague and loose.Unlike the U.S.A. and U.K. stock markets, theAFM does not require the specific informationnormally deemed relevant for an efficient market(Sobs and Bakay, 1989). This might be due to thepolicy of the market of attracting a large number oflisted companies, but could also reflect the lowlevel of market activity. Dahmash, (1987) stressesthat the AFM should require specific regulationsrelating to accounting disclosure for all listedcompanies. In commenting upon the financialmarkets in the Arab countries (including Jordan),Dahmash (1992) contends that all Arab countriesencounter obstacles that reduce the effectiveness oftheir financial markets. He argues that the mosteffective obstacles facing the development of stockexchanges are the following: (1) the loss ofinvestor confidence in shares of listed companies:(2) the lack of information; (3) the spread ofmisleading information, fraud, and intracompanymanipulation leading to investment risk; and (4)the lack of a computerized system.

Thus, as maintained by Farag (1991) developingcountries (this, of course, includes Jordan) arecharacterized by the absence of well functioningstock markets in constrast to those well-developedand advanced ones in the developed nations. Thus,in considering any accounting and corporatereporting and disclosure standards for a developingcountry like Jordan, it is important to keep in mindthe above mentioned facts concerning the country'sfinancial market. This implies that accountingstandards that are mainly designed for situations inwhich there is a large sector of private investors andwell organized and advanced capital market may notfit the situation of a developing country like Jordan.

4. International Accounting Standards: Adoption,Application and LimitationsAs mentioned earlier, the secondary basis of

legitimation for accounting and reporting anddisclosure practices in Jordan was the standardspromulgated by the IASC (IASs). In March, 1989,the Board of Directors of the Auditors Societydecided in its Ordinance No. 54 that such standardsmust be followed by the Jordanian publicaccountants during their examination of financialstatements of JSCs starting in December, 1990. TheSociety's adoption of the IASs may have been madeuncritically. There was no specialized committee orstudy group (from within or outside the profession)commissioned to scrutinise the possibility of theadoption, adaptation or relevance of these standards;n the context of the developing country of Jordan.In addition, the society adopted these standards justa year after its foundation.

Considering the application of these standards inJordan, Mattar (1993), tests empirically whether theJSCs comply with the rules of the IASs concerningthe disclosure of accounting information. Theempirical findings revealed that the JSCs provide80% of disclosure required by the IASs. Althoughthis level of disclosure is, according to the study,reasonable, it is not consistent among the differentparts of financial statements and the notesaccompanying these statements. Despite the apparentproblems of implementation revealed by Mattar'sstudy, the relevance and adequacy of the IASs to theenvironment of the developing country of Jordanmight be questioned on quite different grounds.

The standards promulgated by the IASC arequestioned here in terms of their relevance andadequacy to developing countries including Jordan.These standards are generally criticized becausethey fail to consider the social, political andeconomic environmental factors of developingnations, considering that an accounting systemshould be adapted to meet the needs of individualcountry. Perera, (1985) who argues vehementlyagainst the adoption of these standards, stresses that:

The available evidence suggests that theIASC standards have not been able to makeany significant impact upon accountingpractices of developing countries. The IASCstandards cannot be expected to be successfulin developing countries particularly for two

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main reasons, (a) they are based onexperiences which are totally different fromthose found in developing countries, and (b)lack of relevant standards is only one ofseveral problems in the fields of accounting indeveloping countries, for example, weakfinancial and management accountingsystems in business enterprises, inadequateaccounting knowledge of primary users ofaccounting information, weak professionalcontrol, deficiencies in education and researchare some of them.The existing IASs can be conceived as based

upon the decision usefulness approach to accountinginformation. The stated objective of financialstatements, according to the IASC (1989), is:

... to provide information about the financialposition, performance and changes infinancial position of an enterprise that isuseful to a wide range of users in makingeconomic decisions... while all of theinformation needs of these users cannot bemet by financial statements, there are needswhich are common to all users. As investorsare providers of risk capital to the enterprise,the provision of financial statements that meettheir needs will also meet most of the needsof other users that financial statements cansatisfy.Thus, the function of accounting, according to

the IASC, can be shown to be as the provision ofuseful information, financial in nature, to individualdecision makers, typically shareholders andfinancial market investors, who in turn use suchinformation in accordance with their profit goals,thereby (it is assumed) affecting an efficientallocation of resources. In other words, the 1ASs sethas limited itself to a consideration of therelationships between companies and a veryrestricted set of stakeholders, shareholders andfinancial market investors, within a strictlyeconomic domain, that of financial transactions(Wallac, 1993). One limitation to the decisionusefulness approach is related to its potentialconflict with the accountability' and stewardshipfunctions of corporate reporting. In this respect,Burchell et al. (1982), in questioning the uncriticalacceptance of the decision usefulness orientation,stress that:

The statement that • everyone agrees thataccounts must be useful' is sufficiently vagueto be uncontentious. However, the reportconcentrates on the usefulness of accounts forthose who make decisions directly on thebasis of information coAtained therein, Theinterpretation of usefulness is unnecessarilyrestrictive in two respects. First it ignores theimportance of accounts as a means ofaccountability in a democratic society-that is,the requirement that those with power overresources explain and justify the use of thatpower. Second it completely omits anyconsideration of those who do not useaccounts, but are nonetheless affected by theactions of others who do use accounts.Another limitation attributed to this approach is

that it can he conceived as a poor description of thecurrent accounting practice since management isreluctant to disclose more than is perceived as goodfor the enterprise (Owen et al.. 1987). The decisionusefulness approach fails to address the question ofrights to information (i.e.. the rights of users toreceive information) which might be considered asone of the most important requirements of soundcorporate reporting and disclosure practices (Ijiri,1983; Gray, 1991 and 1992). In this approach,however, only certain recipients of information areassumed to have right to information (i.e.,shareholders and financial market investors andoccasionally creditors), while almost total ignoringthe others who are affected by the businessenterprise's activities (e.g. employees, governmentdepartments and agencies; society at large).

5. CORPORATE SOCIAL RESPONSIBILITYREPORTING AND ACCOUNTABILITY

Consideration of the above limitations andshortcomings of the current CRDPs suggests that are-examination of the roles that accounting can playin terms of their relevance and sufficiency to thedeveloping country of Jordan could be helpful.Jordan, as mentioned earlier, experiences serioussocial and economic problems. It has been shownthat the Jordanian Constitution and National Charterstress the role of parliamentary government in thecountry, Islamic teachings, the rule of the law,

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democracy and political pluralism.It seems, therefore, that there is an urgent need

for change towards a greater social role thataccounting might play in Jordan. That is, there is aneed for an approach to corporate reporting anddisclosure practices that will be of greater use thanthe present one which is based upon the CompaniesAct and the IASs. For a developing country likeJordan, a wider disclosure is needed by the JSCs inorder to redress the problems of informationasymmetry; not just one which restricts itself to aconsideration of the relationships betweencompanies and a very limited set of stakeholders(providers of finance) within a strictly economicdomain (financial transaction).

5.1. Corporate Social Responsibility (CSR)Reporting

There is a need for wider disclosure that cancontribute to both the understanding, debate and,hence, solutions of the social and economicproblems that Jordan undergoes and that mayenhance the principles and doctrines stated in thecountry's Constitution and National Charter.Therefore, it is suggested to extend the existingdisclosure and reporting practices of the Jordanianshareholding companies to incorporate corporatesocial responsibility information, The term`corporate social responsibilities' is defined by Grayet al. (forthcoming) as:

responsibilities for actions which do not havepurely financial implications and which aredemanded of an organization under some(implicit or explicit) identifiable contract.Perks (1993), however, defines CSR reporting as it:involves reporting by companies and otherorganizations about wider social andeconomic aspects of the organization'sperformance than profit and financial positionalone. It is usually seen as reporting to abroader range of interest groups thanshareholders and creditors, includingemployees and even the society as a whole.Recently, attention given to CSR reporting and

disclosure has been increasing in Europe (e. g. Grayet al., 1987), U.S. (e. g. Ullmann, 1985), Canada(e.g. Brooks, .1986), Australia (e.g. Guthrie andMathews, 1985), Japan (e.g. Kokuba, 1993) andsome developing countries (e.g. Malaysia and India)

(see, for example, Teoh and Thong, 1984). CSRreporting and disclosure are clearly not any part ofthe current CRDPs of large companies operating inJordan (see, for example, Al-Awamleh. 1990;Shashaah, 1992).

In supporting corporate social responsibilityreporting and disclosure in the context ofdeveloping countries, Samuels (1990) suggests that:

what is being proposed at this stage is not thatnew things to be measured. It is not beingsuggested that estimates be made of socialcosts and social benefits. which can be costlyto obtain and based on so many assumptionstheir usefulness can be questioned. We arenot opening the social reporting debate.Although social responsibility accounting,would seem to be particularly relevant todeveloping countries.Teoh and Thong (1984) draw attention to the

significance of CSR reporting and disclosure fordeveloping countries in a study of practices inMalaysia, although they report that "predominantlyforeign-owned companies were marginally ahead ofMalaysian-owned companies in reporting socialperformance". In addition, their finding that"relatively greater corporate attention was directedto improving human resources and product/serviceto consumers compared to rendering communityrelated services or alleviating environmentaldeterioration" suggests that a self-interest,investor-manager focus, rather than accountabilitymotivation, dominates (Gray et al., 1987; Mathews,1993).

There is a variety of statements, reports or otherinformational items (financial and non-financial)such as those introduced by the Corporate ReportASSC (1975); Hove (1986); Samuels (1990);Wallace (1993) which can be regarded as impliedby CSR reporting and disclosure (see Bedford,1976; Burchell et al., 1982; Gray et al.. 1987;Mathews, 1993). They include value addedstatements, employments/employees reports,statements of transactions in foreign currency.statements of corporate objectives, statements ofregional flow of funds, statements of regionaldistribution of assets, ecological reports,information related to local communitiesinvolvements and the wellbeing of society,information related to energy usage, information

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related to natural resources conservation andinformation related to consumers and products.

This type of disclosure can be seen as animportant and relevant informational input to theunderstanding debate and, hence, solutions of socialand economic development problems relating, forexample, to income/wealth distribution,unemployment, safety/security at work and level oftraining, balance of payments, regional imbalances,environmental pollution, energy usage and naturalresources consumption and consumers/productrelated problems (see for example, Hove, 1986;Samuels, 1990; Wallace, 1993). CSR reporting anddisclosure is suggested here as important for avariety of audiences in the Jordanian society,including government departments and agencies,employees, local communities, consumers and evensociety at large. It enables them to make informedjudgements about the company's socialperformance, which may assist in the understandingand debate of these problems and hence theirsolutions. It should be noted that the effectiveJordanian General Statistics Law (No. 24 for theyear 1950) makes incumbent upon the JSCs (andother forms of companies) to disclose to theDepartment of Statistics some economic andsocially relevant information such as the valueadded, employees number and the sales volumeabroad.

Samuels (1990) emphasizes the importance andrelevance of CSR reporting and disclosure to thesocial and economic development problems indeveloping countries as he states:

The point being made is that there is alreadyinformation available within a businessenterprise, which is not being disclosed,which is 'relevant' to the debates on thedevelopment problems of the country inwhich the business operates. Production of[this social responsibility information]...would provide significant and highly relevantinformation to the understanding of theproblems. It is only through knowledge of thetrue position that a constructive debate cantake place.In this way, Samuels establishes the relationship

between accounting and the problems thatdeveloping countries experience. Wallace (1993) onthe other hand, argues that the standards of the IASC

are concerned with accounting for transactionswhich imply the flow of resources and reverse flowof money or money's worth in settlement between acompany and other parties. Such standards, asasserted by Wallace, are far from considering eventswhich do not involve and exchange of goods andservices between a company and other party. Headds that companies operating in a certain countryare expected to be socially responsible. Thisresponsibility as regards to a developing countrynecessitates a contribution to the society's objectivesand desires. Thus, financial statements which arepredicated upon the standards of the IASC can beperceived as deficient for determining the extent ofthe contribution made by a reporting company to thesocial and economic development process in thecountry. Accordingly, Wallace (1993) stresses thatthe interests of government and society in adeveloping nation should be given greater attentionthan at present in international standards oncorporate reporting. He suggests the types offinancial and non-financial statements that could beproduced to provide relevant information on howcompanies have contributed to the understandingand hence solutions of these problems. Finally,Wallace identifies a number of developing countrieswhich do require the disclosure of such statements.

Considering that CSR reporting and disclosurewould concern itself with flows of information to amore extensive set of audiences in the Jordaniansociety, more than the purely economic activities ofthe companies, one can see it as providing thepossibility of enhancing the principles and doctrinesstated in the Kingdom's Constitution and NationalCharter (especially, democracy, right to information,equality and social justice, citizens' liberty andrights and moral and ethical values): According toGhartey (1987) (who wrote in the context ofdeveloping countries),

...social responsibility accounting andreporting seeks to provide the public with theinformation they need to ensure that theirpersonal and/or group rights and privilegesare reasonably protected, or to complain ifthey are dissatisfied.

5.2. The Accountability ApproachIn this paper, we argue that the wider disclosure

in terms of CSR reporting, that is suggested to be

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incorporated to current reporting and disclosurepractices in Jordan, calls for a wider accountabilityframework in order to structure the form of thisdisclosure. In this section, we focus upon theaccountability approach to corporate reporting andthe reasons behind our belief that it provides themost appropriate basis for the wider disclosure.

The concept of accountability is a complex one,and there have been many attempts to define it.Rosenfield (1974), for example, definesaccountability as "to report on the control and use ofresources by those accountable for their control anduse to those to whom they are accountable." Ijiri(1975), on the other hand, states that "accountabilitypresumes a relationship between two parties,namely someone (an accountor) is accountable tosomeone else (an accountee) for his activities andtheir consequences". For Gray et al., (forthcoming),accountability is defined as:

The duty to provide an account (by no meansnecessarily a financial account) or reckoningof those actions for which one is heldresponsible (emphasis in the original).In general, such definitions of accountability

imply that there are three basic elements regardingthe accountability concept. Firstly, the obligation toprovide an account by those who are accountable(i.e. the provision of information). Secondly, theresponsibility of those who are held accountable foractions and perhaps their consequences. Thirdly, theprovision of an account of actions and perhaps theirconsequences to the accountee, which might serveas a basis for judgement and assessment by such anaccountee, and may affect their decisions. Our beliefthat the accountability approach can provide a moresatisfactory basis for corporate reporting anddisclosure practices is predicated upon the followingpropositions:

Firstly: The accountability approach is a socialconcept, rather than a concept limited to economicmatters (Gray, 1991). Within a broader concept ofaccountability, the interests of some users do notassume more importance than the interests of otherusers and so, the needs of shareholders and financialmarket investors are not the only ones that areconsidered. It is the needs of society and the publicthat dominate. Thus, it can be seen as an approachwithin which more socially oriented information islikely to be provided by the company.

Secondly: The accountability approach can beseen as a way towards the realization of fairness, aconcept concomitant with the public interest andre-introducing an ethical basis to accounting. Inaccountability based corporate reporting, fairness, asasserted by Williams (1987), becomes a property ofwhich the accountant must be aware. He argues thataccountants cannot avoid making certainjudgements characterized as fairness judgements.

Thirdly: It can be said to be an approach that isbased on notions of 'right to know' or 'right toinformation' (Ijiri, 1983; Gray, 1991 and 1992).Thus, accountability confers these rights directlyand explicitly without resorting to the informationneeds to determine rights. It also implies therequirement that those who have a right toinformation but do not, at the present time, use it(passive users), should have access to it (Burchell etal., 1982).

Fourthly: The basic elements of accountabilityare totally consistent with the concepts anddoctrines implied by the Constitution and theNational Charter. Thus, accountability can beconsidered as a non-radical evolutionary idea basedupon the existing status quo, and so might beaccepted by society at large. In addition, it seemsthat much of the information provided by theexisting practice is consistent with an accountabilityframework.

Fifthly: It can assure the greater flow ofinformation relevant to the debates of the problemsfacing developed and developing countries, i.e.relevant to the debates on issues of affecting acountry's social and economic developmentprocess. As Samuel (1990) notes "There are otheraspects of a corporation's interaction with the staff,the community, and the general public that are ofinterest... It is argued by those requiring greateraccountability that a corporation in order to fulfillits responsibilies, should disclose information onsuch issues. If the arguments are valid for developedcountries they are even more valid for developingcountries".

Therefore, it seems fair to conclude that theaccountability framework is a universal approach(which can be applied in both developed anddeveloping countries) and is likely to provide theopportunity to ensure a legitimate and justifiedcorporate reporting and disclosure practices in

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Jordan. According to Jensen (1977), who studiedaccounting for the economic, social andenvironmental impacts of a business: "Given thegreat diversity of problems faced in differentindustries, different communities, different regions,and different parts of the world, it seems unlikelythat the search for universal solutions or uniformstandards will bear much fruit". If we are, he adds,to avoid extreme solutions to our problems, withneither the excessive exercise of power nor thebreakdown of authority, then it could be argued thatbusiness enterprises should be more accountable.This is also emphasized by Samuels (1990) as henotices:

It is being argued that whether decisions arebeing made in the market place or areadministrative there is a need, particularly indeveloping countries, for greaterinformation... The governments of developingcountries require re-evaluation of themeasurement processes and the disclosuretechniques currently used... It is appreciatedthat to take such action is a political move. Itmeans asking for a greater level ofaccountability.

6. RESEARCH DATA AND METHOD

An empirical survey was conducted by means ofa personally delivered and collected questioni17, ire inorder to explore the view and perceptions as regards:(a) the notions of corporate social responsibility andaccountability; (b) disclosure of corporate socialresponsibility information, and possiblesocioeconomic effects; (c) the possibility that legalrequirements and accounting standards calling forthe disclosure of corporate social responsibilityinformation might be feasible: and (d) the possibilityof implementing such a sort of disclosure in Jordan.

A pilot study was conducted on a small numberof respondents in order to test the questionnaire andto find out any problems such as ambiguous andextraneous questions. In the main survey,questionnaires were delivered to a sample of 206individuals amongst the accounting community inJordan. The population of our survey was defined asthose: who may possess the technical andprofessional capabilities in accounting; who may beinvolved in one way or another in corporate

reporting and disclosure practices in Jordan; andwho may help in any change of these practices inJordan. Therefore., the population of the studyconsists of the following groups: (1) thoseresponsible for the preparation of corporate annualreports in Jordan (preparers), i.e. financial managersof the JSCs (or the equivalent) and publicaccountants members of the Jordanian Associationof Certified Public Accountants; (2) academics inthe field of accounting who may be considered ashaving objective attitudes in addition of being awareof the real problems of the country; and (3) theofficial bodies concerned, governmental andnon-governmental, and who may also be seen assurrogates for society at large.

The samples included in this study were selectedas follows: As of the 1991 Issue (No. 7) of theJordanian Shareholding Companies Guide {i.e. thepopulation frame), the total number of companieslisted in the Amman Financial Market (AFM) at theend of December 1990 amounted to 112. Thisnumber comprises 21 companies in the banking andfinancial sector. 17 in insurance, 29 in services, and45 in the industrial sector. A proportionate stratifiedsample of 50% of the total number of companies(after excluding those companies surveyed in thepilot study) was selected. In constructing the publicaccountants sample, the Jordanian accounting firmslisted in the 1993 Membership Directory of theJordanian Association of Certified PublicAccountants was used as a population frame. ThisDirectory listed the names of 64 Jordanianaccounting firms, including the largest six' inJordan. It should be noted that of the 112 listedcompanies in the AFM, 95 companies (about 85%of the total listed companies) appointed one of the`largest six' firms as their auditors. It was decided toselect the public accountants from a random sampleof 26 (40%) Jordanian accounting firms of the totalnumber of 64 including all of the 'largest six'accounting firms in Jordan. After communicatingwith such accounting firms (i.e. the largest six' andotherwise), it had been found that a total number of71 public accountants after. of course, excludingthose who have been surveyed in the pilot study (31public accountants of the 'largest six') were at theirwork at the time of the survey. This samplingprocess may ensure the representativeness of thesample as much as possible.

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Before constructing the sample of academics inthe accounting field, it has to be recognized thatthere are no certain statistics about the total numberof those academics in Jordan. As far as this surveyis concerned, it was decided to include all thefull-time accounting academics of the Jordanianuniversities which have accounting departments asparticipants in the questionnaire survey, since thenumber of these universities at the time of thesurvey was limited. However, among the 11governmental and private universities in Jordan(Department of Statistics, 1992) 7 universities (3governmental and 4 private) include accountingdepartments with full-time staff members, while therest are universities specializing in science andtechnology. After communicating with theseuniversities, it was found that a total number of 45academics (after excluding those surveyed in thepilot study) were full-time staff members at the timeof survey.

A total number of 14 official bodies(governmental and non-governmental) wereconsidered by the researchers, based on thesuggestions of the Accounting Bureau and theMinistry of Trade and Industry in Jordan and theprevious related studies (see, for example, Shashaah,1992) as well, as seriously concerned with corporatereporting and disclosure practices in Jordan. It wasdecided that a total number of 40 officials from suchbodies should be included in the representativesample of officials in Jordan. It should be noted thatsuch officials who have already been surveyed in thepilot study were eliminated. Table (I) shows asummary of the sample and respondents.

Nonresponse bias can do harm to the resultsobtained. Thu , test for its existence is deemednecessary. In respect, Wallace and Cooke(1990) sugges • late respondents are similar tononrespondents. something which necessitates acomparison bei'o...' ,;.JA them to determine whethersuch a bias existeJ. As far as this research isconcerned, the tots' li.iinber of late responses wasonly 6 (about 4.6% ihe usable responses), so thatno statistical tests could be performed. However, thehigh overall response rate of 63.6% might suggestthat any nonresponse• bias will not seriously affectthe results.

A review of each questionnaire was undertakento assess the integrity of the survey results. Thisreview led to the exclusion of 27 questionnaires.The exclusion of such questionnaires was basedupon the following circumstances: (1) Some ofthese questionnaires were intended for financialmanagers of JSCs (or the equivalent and publicaccountants members of the Jordanian AuditorsSociety). But it has been found that accountants tothese questionnaires were neither financialmanagers nor public accountants. Indeed, they wereindividuals with other positions in the companies(e.g. internal auditors) or accountants withoutprofessional qualifications entitling them to bepublic accountants members in the JordanianAuditors Society. (2) There were somequestionnaires in which the information omittedapplied to various questions and the degrees ofincompletion varied. (3) There were somequestionnaires in which 'neither agree nor disagree'responses were frequently, and possibly randomly,dispersed throughout the questionnaire.

Table 1.: Summary of the Sample and Respondents.

Explanation Total % FMs PAs ACs OFs

Delivered Questionnaires 206 100 50 71 45 40

Collected Questionnaires 158 76.7 38 49 36 35

Excluded Questionnaires 27 13.1 6 12 4 5

Usable Questionnaires 131 63.6 32 37 32 30

Total Responses (%) 63.6% 64% 52.1% 71% 75%

Keys to Table (1): FMs- financial managers; PAs public accountants; ACs = academics: OFs official bodies.

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7. EMPIRICAL RESULTS7.1. Perceptions on the Company's Social

Responsibility and AccountabilityA question was asked of subjects in the sample in

order to gain insight as to their views towards thenotion of social responsibility of the JSCs. Theywere provided with a list of audiences who might beaffected by the companies' actions and policies, andasked to indicate the extent of their agreement withthe statement that the JSCs should acceptresponsibilities towards each of these audiences.

Table (2) presents some of the related results. Itis clear from the findings that the various groupsinvolved share the same distributions of views as towhether the JSCs should accept responsibilitiestowards each of these constituencies. The vastmajority of the respondents (not less than 89%)

agreed on that the JSCs should accept responsibilitytowards those who may be affected by thecompany's actions and policies, including society atlarge. These results demonstrate the positiveattitudes of all groups of respondents towards thenotion of wider social responsibilities of the JSCs toa wider audience (including society at large)regardless of the companies' motivation behind theadoption of these responsibilities (i.e. Ho l).

One question was introduced to subjects in thesample in order to know their perceptions as to thenotion of accountability of the JSCs. Participationswere provided with the same list of stakeholders (asin the above question) and asked to indicate theextent of their agreement about whether each ofthose audiences should have a right to informationabout actions for which the JSCs is held responsible

Table 2.: Perceptions on Responsibility of The JSCs.

STAKEHOLDERS Usable

Responses

AGR. NEI DIS *X2

Consumers130 119 3 8

7.95100% 92% 2% 6%

Employees131 128 2 1

7,77100% 98% 1% 1%

Creditors131 122 5 4

8.70100% 93% 4% 3%

Shareholders and investors131 127 2 2

3.88100% 97% 1.5

%1.5%

Local Communities 131 122 8 14.15

100% 93% 6% 1%

Government departments and agencies131 119% 10 2

11.71100% 91% 7.5

%1.5%

Society at large 131 116 13 22.60

100% 89% 10% 1.5%

Keys to Table (2): Usable Responses = Total Responses - No Responses; AGR = Agree; NEI = Neither AgreeNor Disagree; DIS = Disagree.

* X2 : The calculatd value of chi-square. If the value of X 2 is greater than 12.59 (critical value), then thereare significant differences in distribution of views amongst the various groups involved.

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towards them.Table (3) reveals that the four groups involved in

general share the same distributions of views as tothe audiences' rights to information (i.e. H02). Thevast majority of the respondents (80-90%) showedagreement with that audiences, other than providersof finance, should have a right to information aboutactions for which the JSCs is held responsible,including government departments and agencies,employees, local communities, consumers andsociety at large. The exception was the question ofconsumers' right to information. It would appearthat amongst the four groups of respondents, onlyfinancial managers showed a relatively low supportto the idea that consumers should have right toinformation.

A considerable proportion (34%) of financialmanager respondents seemed to be against theconsumers having right to information, whereas41% agreed and 25% had no clear view in thisregard. It should be noted that most of the financial

managers who showed disagreement or provided noclear views were those of the companies thatproduce raw e 'terials for exportation, insurancecompanies 2.(, construction equipment, andsupplies compa ,lies. Such financial managers mayhave no idea about the nature of the information tobe disclosed to the consumers or they may think thatthe consumer related information is not applicableto their companies.

7.2. Perceptions on the Wider Disclosure of CSRInformation and Its Implementation

This section will attempt to provide an insight onthe issue of the existence of a demand for, or atleast, an acceptance of the possibility of widerdisclosure in terms of CSR reporting, as perhapsleading to some beneficial socioeconomic effects. Inaddition, it will touch on some aspects concerningthe possibility of implementing such a sort ofdisclosure in Jordan.

Subjects of the sample were provided with a list

Table 3.: Perceptions on Rights to Information .

STAKEHOLDERS UsableResponses

AGR NEI DIS X'

Consumers131 90 23 18

24.01100% 69% 17% 14%

Employees131 113 12 6

11.97100% 86% 9% 5%

Creditors131 128 2 1

2.87100% 97% 2% 1%

Shareholders & investors131% 126 4 1

11.20100% 96% 3% 1%

Local Communities 131 108 18 57.42

100% 82% 14% 4%

Government depts. & agencies131 118 10 3

4.60100% 90% 8% 2%

Society at large 131 105 19 77.36

100% 80% 15% 5%

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Dirasat, Administrative Sciences, Volume 25, No. 2. 1998

of CSR information, statements and/or reports(items). They were asked about the extent of theiragreement on whether the JSCs should disclose thelisted items, as perhaps leading to some beneficialsocioeconomic effects, in their natural reports.However, this is not an exhaustive list and mayappear as relatively narrow, but it is believed that itdid ,erve the intended purpose in this investigation,The findings indicate that the various groupsinvolved share the same distribution of views as tothe disclosure of most of the listed items (socialresponsibility items) in the JSCs annual reports (i.e.H03). The vast majority of the respondents of thissurvey (72-89%) agreed that the JSCs shoulddisclose in their annual reportsemployment/employees related information;information about regional flow of the company'sfunds; environmental pollution related information;information about regional distribution of thecompany's assets; information about cashtransactions in foreign currency; local communitiesrelated information; energy usage relatedinformation: and natural resources conservationrelated information. The exceptions were the itemsrelated to the 'value added statement' and'consumers related information'.

The financial manager respondents showed arelatively low agreement with the disclosure ofthese items in the annual reports of the JSCs. Only53% of them agreed on the 'value added statement'with 16% disagreed and 31% providing no clear

views. The respondents who indicated no clear viewmay not have had a clear idea about the nature ofthis statement. About 41% of the financial managersagreed on the disclosure of 'consumers relatedinformation' as against 25% percent who disagreedand 34% who provided no clear opinion, which isconsistent with their views on consumers' right toinformation (reported about).

Thus, it is clear that respondents from the variousgroups (preparers, academics and official bodies)showed willingness to accept the desirability ofwider disclosure in terms of CSR reporting. Such anattitude may be attributed to the following:(1) An increasing awareness of social responsibili-

ties of the business and, hence, CSR reportingas perhaps leading to some beneficial socioeco-nomic effects.

(2) The disclosure of CSR items may reflect Jor-dan's more moral culture.

(3) The disclosure of CSR items may be seen associally and morally desirable, so it cannot beeasily denied by the respondents.

(4) The disclosure of CSR items may be regarded bythe public accountant respondents as a new areaof interest which requires their involvement andexpertise.

(5) The disclosure of CSR items may be regarded bythe financial managers as a type of publicrelations activity of the business.

Subjects of the sample were provided with a listthat includes some of the possible reasons which

Table 4.: Perceptions on the Main Reasons for not Making CSR Disclosureby the JSCs.

Reasons Average*Score

StandardDeviation

No legal requirements (1) 3.9 1.148

Not required by the IASs (2) 3.8 1.085

Insufficient demand (3) 3.4 0.918

Would like to, but unsure of how to proceed (6) 3 . 2 1.085

Information sensitive and confidential (5) 3.0 1.275

Cost outweighs benefit (4) 2.7 1.221

* The average score is measured on a 1-5 scale: 1 means not at all important, 5 means veryimportant. The mid-point of the scale is 3.

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may induce the JSCs for not to make CSRdisclosure and were asked to indicate theirassessment of the level of importance of thesereasons. This may provide an insight about some ofthe possible ways for implementing this sort ofdisclosure in Jordan. Table (4) presents the averagescore for each possible reason and the standarddeviation. The average score has been calculated bytaking the arithmetic mean of the rank numbersgiven by each respondent. The reasons are listed inthe order of importance determined by their averagescores. The position in which each reason appearedin the questionnaire is revealed by the numbers inparentheses.

Table (4) reveals that respondents to this surveythought that the main reasons for not making CSRdisclosure by the JSCs are basically related to thelack of legal requirements (reason 1) and theabsence of accounting standards within the IASsrequiring listed reasons (3.9 and 3.8 respectively).Nearly 37% of the respondents ranked the reason of`no legal requirements' at point 5 (very important),and further 38% at point 4 (important); while 28%ranked the reason of not required by the IASs atpoint 5, and additional 42% at point 4. theKruskal-Wallis test showed at a 5% level ofsignificance general agreement amongst the fourgroups involved on these reasons (i.e. H04).

This may indicate that despite the willingness ofthe respondents to accept the desirability of widerdisclosure of CSR information, there is a need forlegal and professional pressure in order to ensurethe possibility of implementing this sort ofdisclosure in Jordan.

As shown in (Table 4), reasons such as 'theinsufficient demand on CSR disclosure in Jordan'(reason 3), 'the unsureness of how to proceeddespite the desirability of this type of disclosure'(reason 6) and 'the sensitivity and confidentiality ofCSR information' (reason 5) were all regarded bythe respondents as being of some importance interms of preventing the JSCs for not making CSRdisclosure. Also, a general agreement amongst thefour groups involved on these reasons was inevidence. Thus, respondents add more evidencetowards the willingness to accept the desirability ofwider disclosure in Jordan as they saw the reasons3, 6 and 5 as not comprising serious impedimentsthat may hinder the possibility of the

implementation. The reason indicating that the costof CSR disclosure outwieghts benefit' (reason 4)was regarded by the respondents as being of a lowimportance, since it received an average score lowerthan the mid-point on the scale (2.7). A generalagreement amongst the four groups involved can benoticed. These findings, therefore, add supporttowards the willingness to adopt the desirability ofwider disclosure of CSR reporting in Jordan, asrespondents from the four groups involved refusedthe claim that the cost of such disclosure outweighsthe expected benefit from it.

8. CONCLUSIONS AND RECOMMENDATIONSIn summary, the main conclusions of this study are:Firstly: That the current corporate reporting

practices of the JSCs are not consistent with therequirements of the social, economic and politicalenvironment of Jordan.

Secondly: That an accountability approach basedon concepts of corporate social responsibility mightprovide an appropriate framework for determiningthe necessary wider disclosure.

Thirdly: That a survey of accountingcommunity in Jordan indicates that the notions ofcorporate social responsibility and reporting arewidely accepted as desirable and feasible.

Fourthly: The findings of this study may wellapply to any other Arab country that enjoys similarcultural, social, economic and political environment.

It is therefore suggested that the accountingprofession, corporate management. the relevantgovernmental bodies and the accounting educationsystem in Jordan should take into consideration theconclusions arrived at in this study, and activelysupport any efforts to review and improve theexisting corporate reporting and disclosure practices.In particular, the following are recommendations forthe accounting community in Jordan:

First: The structure of accounting education andaccounting activities in Jordan should take intoconsideration the country's economic, social andpolitical objectives. Moreover, the accountingcurriculum of the Jordanian universities andcolleges should be adapted so that it includes thesocial role of accounting and CSR reporting anddisclosure in Jordan.

Second: The accounting profession in Jordanshould undertake the responsibility of providing

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practitioners with the necessary materials andprocedures that could enable them to be aware of, andprepared for, the social role of accounting and of CSRreporting and disclosure in Jordan. This, of course,includes publications and courses about the nature andimplementation of social responsibility accounting.

Third: The IASs may be regarded as valuable bysome sections of the Jordanian society, such asinvestors and shareholders and preparers, and alsofor others (both within and outside the country)interested in the issue of harmonization ofaccounting practices. Yet, because of the currentemphasis of these standards on decision usefulness,such standards are likely to impede the introductionof the wider disclosure in terms of the CSRinformation suggested to be incorporated in CRDPsin Jordan. Therefore, the IASs would be morevaluable for developing countries, including Jordan,if the basis were extended from that of decisionusefulness for investor/shareholder groups toinclude other groups with rights to information. Theresulting additional standards could be adopted asnecessary by developing countries as required fortheir own situations.

Fourth: As shown earlier, the adoption of theIASs in Jordan was made uncritically by theJordanian Association of Certified PublicAccountants. Indeed, many important sections in

society (and whose involvement might be deemednecessary, e.g. academics, government agenciessuch as the Accounting Bureau) were ignored whendeciding on the adoption of such standards.Therefore, it is recommended that such othersections in society should be consulted in theprocess of setting accounting standards.

Fifth: It is recommended that emphasis shouldbe placed upon the disclosure of CSR items(statements, reports and information) by the JSCs, insonic section of the annual report information; valueadded statement; cash transactions in foreigncurrency statement; information about regional flowof the company's funds; information about regionaldistribution of the company's other assets;environmental pollution related information; localcommunities involvements related information;consumers/products related information; energyusage related information; and natural resourcesconservation related information.

Sixth: It is recommended that the JordanianCompanies Act or other legislations that organizesbusinesses in Jordan should include requirements toensure the disclosure of CSR information by theJordanian shareholding companies.

Seventh: It is recommended that the AFM shoulddemand the disclosure of CSR information items asone of its listing requirements.

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